It really doesn't matter what you?ve heard or what you know. No matter how bad the news, or how awful the recent press reports about the recording industry, and regardless of how many "Behind the Music" horror stories you?ve seen . . . As soon as you?ve mastered(?) three chords in the Mel Bay "Beginning Rock Guitar for Kids " book, or found enough courage to graduate beyond simply Bono-posing in front of the bathroom mirror with a Mr.
Microphone . . . in your heart of hearts, you still want a ?record deal.? (Go ahead. Admit it. God is listening.)
Surely, some among us may self-righteously claim they don?t want or need
such an unholy alliance, but how many of us has ever actually been faced
with the opportunity to turn down a million dollar advance simply to make
music, sing songs, travel the world, and generally be adored by the masses?
But, why? Why do we think we need a ?record deal??
Mostly, because all of our own heroes have ?made it? within the confines of
a record deal, and there?s very little precedent for anyone of us getting
our music to those adoring masses without the financing, marketing
assistance, and distribution power of the companies which offer those
?deals.?
Things are changing, though. Right?
Uh, . . . yes - and no. Technology has made it possible to make great
sounding recordings from our own bedrooms, without million-dollar budgets,
and the Internet has suddenly made the music of all those little
home-base-labels instantly available - ?WORLDWIDE!? (Or, so they say.)
But, being accessible by a ?worldwide? audience, and then expecting that
audience to have a clue your music exists are two entirely different matters
and that is why, despite all the recently-revealed evils of the
established music industry, the major labels and their subsidiaries are not
going to fade quietly into the background noise of La Revolución de Indie.
If you want your music to be heard by more than just your
chronically-aggravated parents and a couple of local church youth groups,
you?re going to need access to someone with substantial marketing skills
and/or financing. Yep, even Internet radio is made up of those same
tone-deaf, musically-illiterate homo-sapien ?programmers? - who must first
know of your very existence, then be convinced that your song is worthy of
taking precedent over those other 100 million mp3's accessible to the
worldwide audience. Oh, and one other thing . . . That alleged worldwide
audience, (or at least some portion of it), must then be convinced to care
about you, and your ?best-stuff-since-Cobain? songs.
THAT process, with very few exceptions, (and yes, there are a few . . . but
too few to matter), is an expensive, tedious, time-consuming process. And
THAT is the reason why there will remain some incarnation of a dominant
music ?industry? which we can all morally look down upon from our
artistically superior perches. (Hey! If we can?t ALL be international rock
stars, there?s just got to be an Evil Empire keeping us down. After all,
YOUR music doesn?t suck! Right?)
All that said, and whether or not you even agree, there is one thing that is
indisputable . . . the typical, and long-established financial relationship
between recording artists and their labels may be the single most
inequitable and morally reprehensible contractual relationship existing on
our planet. (OK. Somewhat overstated. Slavery is worse, but only because
a slave doesn?t normally volunteer for the job.) Have you ever actually seen
a recording contract? What a ?deal? it is.
Sometime back in the Stone Age of recorded sounds, shortly after Edison
invented that tin-covered tube-looking thingy, a new life form emerged from
the sulfur-swamps of Hell - overweight, toking on a Cuban cigar and calling
itself a ?Record Exec.? This spawn of Satan quickly made some profitable,
and unfortunately correct assessments about the average musician and singer
- they will suspend all better judgment and common sense, make any
sacrifice, even cut a Faustian deal for the opportunity to have their music
heard outside their hometowns, and to get their picture on the cover of
Rolling Stone . . . er, HM Magazine.
It must have been decided fairly early on in the industry?s evolutionary
cycle that an artist?s songs, performances, blood, sweat and tears are
infinitely less valuable than a label?s money, when entering into a
so-called ?partnership? together. Its doubtful the artist consciously
agreed to this idea. One can only assume that before the era of managers
and agents, the artists? drummers were negotiating those early record deals.
For the uninitiated, here?s a quick primer on the contents of the typical,
industry-standard recording contract:
To begin with, after a few thousand words of legal-ese establishing the
rights of the label (as compared to the lack thereof for the artist) and the
obligations required of the artist (as compared to the lack thereof from the
label), the contract gets around to stating the first and
most-likely-to-be-unfulfilled promise made by the label the ?Artist
Royalty Rate.?
Typically, a new artist is to receive what?s commonly referred to as a
?10-point? deal. In other words, the artist is to receive ?10% of the list
retail price of net sales of full price albums sold in the United States.?
Now, for those who are not Ivy League law students, it should be pointed out
that this one fragment of a sentence, (?10% of the list retail price of net
sales of full price albums sold in the United States?), opens the door for
more exclusions, loopholes and opportunities for non-payment than the entire
20,000-page NAFTA agreement. (Ever wonder why a ?free trade agreement?
requires 20,000 pages of regulation to administrate the free trade of goods
between countries? Must have been written by entertainment lawyers.)
Ten percent of the retail list price ain?t bad! Right? Today?s list price
averages about $17.98, per CD. Do the math. The artist believes (because
they usually speak English, and not Label-ish) they will be paid about $1.80
for every CD sold. Sell a million records, become a millionaire. Right?
Wrong.
That one sentence giveth . . . but the next 10 pages taketh away:
*Right off the top, the label assigns a producer who usually takes from 2 to
4 points of the artists? original 10. (The labels do not share in this
expense with the artists, even though the decisions are controlled
exclusively by the label.)
*Most labels calculate the net royalty rate on just 90% of all records sold.
Unilaterally ignoring 10% of all units sold. (Why? Like dear old mom
always said, ?Because I said so.?)
*There?s almost always an additional 25% ?packaging deduction.? (Are you
keeping up with the math, so far?)
*Most of these ?deals? will only pay 75% of the royalty rate on recordings
distributed via so-called ?new technologies.? Thousands of titles are being
sold today, in which CD?s are still classified as the ?new technology,? and
in those cases royalties are being calculated from the retail price of
cassette tapes! (When was the last time you bought a cassette tape of a new
release? 1986?)
*What happens when your record is sold through a record club or makes its
way into the bargain bin? You get paid, 75%, 50% or 0% of your applicable
rate, depending upon the circumstances.
*Oh, yeah! Remember that the labels only pay on 90% of all units sold?
Well, additionally, they can give away anywhere from 25% to 50% of the total
of CD?s actually sold, without having to pay any royalties on those
promotional giveaways. Who accounts for how many were actually sold, and
how many were given away? The label does, . . . of course.
*What happens if your band happens to be ?really big in Uzbekistan?? All
units sold outside the U.S. pay at 50% of your stated royalty, with no
regard to what the actual costs of importation or foreign manufacturing may
actually be in a particular country. Even if those costs happen to be less
than those in the U.S.
*How about legal downloads? (Not that anyone legally downloads music.
Yet.) Again, 50% of the net royalty rate is paid. Why? It?s a ?new
technology.? (Even though it may actually be cheaper for the label. No
packaging. No shipping. No distribution costs. Just a few pennies worth of
bandwidth.)
Too many numb-ers? Yes, so in review . . . the artist gets $1.80 per
record, . . . but not really. The producer gets a third of that. The label
only pays on 90% of sales, and deducts an additional 25% for the wrappers.
(Even more for rappers. Seriously!) But, all of those numb-ers are reduced
further if the discounts necessary to actually induce the buyers are put
into effect, or if the actual technology used resembles anything more
advanced than a shofar blown onto Edison?s phonograph.
With me so far? I didn?t think so. Nevertheless, on to the really juicy part
. . . all the above inequities are just the ?unfair? parts of the record
deal. To quote Dan Aykroyd, from The Twilight Zone, The Movie, . . . ?Wanna
see something really scary?? This is the part of the ?deal? even the smart
one in your band misses until after the 2nd or 3rd album is released, and
you?ve still not seen a royalty check.
Money never comes without a cost, but in the case of the recording industry,
those costs are calculated on a scale even the Sopranos would kill for.
Except, unlike the loan-sharking activities of your local neighborhood
Mafioso, what the record labels do is completely legal.
Recording, production and marketing costs come to the artist in the form of
?advances? against net royalties. (Remember that word, ?net.? It will be
important in just a moment.) In other words, most, if not all the advance
associated with putting that record together and getting the public to care
about it, is nothing more than a ?loan? from the label. But, loans aren?t
bad . . . are they?
Today, you can borrow $20,000 to buy a car, at ZERO-percent interest. You
can buy a house at 5-6% interest. You can max out your credit card at 12%
to 21% interest. We all expect to be charged a premium for using someone
else?s money. But, charge any rate higher than 24% or 25%, and most States
will invoke ?usury? laws to protect the consumer against unfair lending
practices. Unbelievably, in calculating the ?cost? of borrowing money from
a record label, your actual realized interest rate can be in the
thousands-of-percent!
If you?re not a Catholic, you may not believe in the apocryphal place known
as ?Purgatory.? But if you?re a recording artist, signed to a typical record
label, you must go through a type of Purgatory. A place from which over 90%
of all recording artists never emerge The nether regions known as
?recoupment.?
Recoupment - is the period between the sale of your very first CD released
by the label, and the moment you receive your first ?Artist Royalty? check.
Which, ultimately, is less likely to happen than you winning the Super
Lotto, or Ben Affleck being struck by lightening on the third anniversary of
his marriage to J-Lo.
Recoupment - is the process of paying back your label for all ?advances? of
the recording costs, video production, tour support, and usually about 50%
of marketing expenses. On the surface, that does not seem unreasonable.
Except for the fact that the actual dollars earned by the label, from the
sale of your music, are not what counts towards recoupment. In other words,
if the label nets $5 off the sell of those $15 CD?s, the payback is not
calculated from the $5 the label actually receives into their own hands.
Recoupment is calculated from your ?net? Artist Royalty rate. After all
those aforementioned deductions, your actual net-net-net-net-net (you get
the picture) royalty rate will probably be less than 50 cents per unit.
Look at it this way . . . If you are advanced $100,000 from your label, you
will probably have to sell more than 200,000 CD?s before you ever get a
single penny from your work. At 200,000 CD?s sold, about $3,000,000 has
moved through the system. Retail and distribution companies have made about
$2 million, and your label has made up to $1 million. In Artist Royalties,
you have made . . . Zilch. Nada. Zippo. Squat!
In fact, in the CCM industry, at 200,000 units sold you are bordering on
near-superstar status, but you?ve only generated just enough touring
interest to be heavily indebted, not only to your label, but also to all the
tour support and equipment vendors. You?re now on the industry treadmill,
with little possibility of ever actually breaking out of recoupment -
touring 275 days a year to pay your bills - never seeing your family and
eventually resenting that gift of music which was formerly oxygen to your
soul.
There?s a reason why, after selling over 20 million CD?s, the Dixie Chicks
sued Sony Music - accusing their label of ?systematic fraud? and ?thievery?
in they way they do business with their artists. Ultimately, the Chicks
settled with Sony, conceding in an August 2002 interview with USAToday, that
?unfortunately, they (record labels) all operate like that.? There was
nowhere else for them to go, where they could expect to be treated any
differently.
Insult to injury, for Christian artists, is that our marketplace is
inherently about 1/10th the size of the general market, but those ?record
deals? were originally designed for the larger general market, and for
artists who were required to tour obsessively - at the expense of wives,
children, or other real life commitments, to promote those records. A
secular market model, which does not value the spiritual or Biblical
requirements of ?family first,? or of making sure that our ?yeas are yea? in
other of life?s commitments.
If a traditional record deal is no less than ?fraud? and ?thievery? to a
secular artist, exactly how can it be properly described for a Christian
artist, whose typical market potential is about 1/10th that of their
mainstream counterparts? Ten times worse than ?criminal? equals, . . . what?
Demon dung?
In the final analysis, a record deal is nothing more than a really bad sales
job, . . . in which your boss gets to keep most or all of your commissions.
And in your off hours, you have to travel across the country singing for
your dinner, all the while promoting those sales which just go to your boss
anyway.
But, hey! Some people do win the lotto - and your next girlfriend could be a
virgin by the name of Britney Spears.
So, . . . you still want a record deal?
If so, hang in there. Times, they are a-changin?. There will always be a
system or an industry devoted to promoting the music of our best artists,
but there?s a new system being created, even as you read these words. There
are some wonderful new ideas being experimented with, just now emerging over
the horizon. Technology and the Internet are creating chaos within the old
industry, but technology is not going to bring down the Evil Empire. The
Dark Side is being challenged by a new generation of Christian
entrepreneurs, dedicated to treating the artists as equal partners in the
?deal.? Where the value of the song and the performance of the artist are on
equal footing with the investors? dollar.
If you?re a starry-eyed artist, just be patient. If you're musical goals
include ministry aspirations, you need to put the full brakes on, and tarry
a little longer in the Indie wilderness. If you?re a jaded industry
veteran, you?d best be looking over your shoulder . . . or looking for a new
career.
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